Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.:

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company þ

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ

The number of shares of the registrants common stock outstanding as of May 4, 2011 was 20,902,994
shares.

TRANS1 INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2011
TABLE OF CONTENTS

TranS1 Inc., a Delaware corporation (the Company), was incorporated in May 2000 and is
headquartered in Wilmington, North Carolina. The Company is a medical device company focused on
designing, developing and marketing products that implement its minimally invasive surgical
approach to treat degenerative conditions of the spine affecting the lower lumbar region. The
Company operates in one business segment. The Company currently markets the AxiaLIF® family of
products for single and multilevel lumbar fusion, the Vectre and Avatar lumbar posterior fixation
systems and Bi-OsteticTM bone void filler, a biologics product. All of the Companys
AxiaLIF products are delivered using its pre-sacral approach. The AxiaLIF 1L product was
commercially released in January 2005. The AxiaLIF 2L product was commercially released in Europe
in the fourth quarter of 2006 and in the United States in the second quarter of 2008. The AxiaLIF
2L product was discontinued in 2010 after the Company launched its AxiaLIF 2L+ product in July
2010. The Company commercially launched its next generation Vectre facet screw system in April
2010. In the first quarter of 2010, the Company entered into agreements to distribute Avatar, a
pedicle screw system, and Bi-Ostetic bone void filler, a biologics product. In March 2011, the
Company received 510(k) clearance for its next generation AxiaLIF 1L+ product and made it
commercially available in a limited market release. The Company sells its products directly to
hospitals and surgical centers in the United States and certain European countries, and to
independent distributors elsewhere.

The Company owns seven trademark registrations in the United States and eight trademark
registrations in the European Union. The Company also owns two pending trademark applications in
the United States and two pending trademark applications in Canada.

The Company is subject to a number of risks similar to other similarly-sized companies in the
medical device industry. These risks include, without limitation, acceptance and continued use of
our products by surgeons, the lack of clinical data about the efficacy of our products, uncertainty
of reimbursement from third-party payors, cost pressures in the healthcare industry, competitive
pressures from substitute products and larger companies, our historical lack of profitability, our
dependence on key employees, regulatory approval and market acceptance for new products, our
reliance on a limited number of suppliers to provide our products, changes in economic conditions,
our ability to effectively manage a sales force to meet our objectives and our ability to conduct
successful clinical studies.

2. Basis of presentation

The Company has prepared the accompanying consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America (U.S. GAAP) for interim
financial information and pursuant to the rules and regulations of the Securities and Exchange
Commission. The consolidated financial statements are unaudited and should be read in conjunction
with the audited consolidated financial statements included in the Companys Annual Report on Form
10-K for the year ended December 31, 2010. The accompanying unaudited interim consolidated

financial statements reflect all adjustments (consisting of normal recurring adjustments) which
are, in the opinion of the Companys management, necessary for a fair statement of the Companys
consolidated financial position, results of operations and cash flows for the periods presented.
These principles require management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues and expenses during
the reporting period. The principal estimates relate to accounts receivable reserves, inventory
reserves, stock-based compensation, accrued expenses and income tax valuations. Actual results
could differ from those estimates. The year-end balance sheet data was derived from audited
financial statements, but does not include all disclosures required by U.S. GAAP. All intercompany
accounts and transactions have been eliminated in consolidation.

Impact of Recently Issued Accounting Standards

There have been no recently issued accounting standards that have an impact on the Companys
consolidated financial statements.

3. Income Taxes

No provisions for federal or state income taxes have been recorded as the Company has incurred net
operating losses since inception.

4. Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of
common shares outstanding. Diluted net loss available to common stockholders per common share is
computed by dividing net loss by the weighted average number of common shares and dilutive
potential common share equivalents then outstanding. The Companys potential dilutive common
shares, which consist of shares issuable upon the exercise of stock options, have not been included
in the computation of diluted net loss per share for all periods as the result would be
anti-dilutive.

The following table sets forth the potential shares of common stock that are not included in the
calculation of diluted net loss per share as the result would be anti-dilutive as of the end of
each period presented:

The Company considers all highly liquid investments with an original maturity of three months or
less at the date of purchase to be cash equivalents. Cash and cash equivalents include money market
treasury funds. Short-term investments consist of U.S. agency backed debt instruments.

At March 31, 2011, the Company held certain assets that are required to be measured at fair value
on a recurring basis. These assets include available for sale securities classified as cash
equivalents and short-term investments. Accounting Standards Codification 820-10 requires the
valuation of investments using a three-tiered approach, which requires that fair value measurements
be classified and disclosed in one of three tiers. These tiers are: Level 1, defined as quoted
prices in active markets for identical assets or liabilities; Level 2, defined as valuations based
on observable inputs other than those included in Level 1, such as quoted prices for similar assets
and liabilities in active markets, or other inputs that are observable or can be corroborated by
observable input data; and Level 3, defined as valuations based on unobservable inputs reflecting
the Companys own assumptions, consistent with reasonably available assumptions made by other
market participants.

At March 31, 2011, all available for sale securities were classified as Level 1 assets with a fair
value of $36.5 million, which included money market funds of $6.3 million and short-term
investments of $30.2 million. At December 31, 2010, all available for sale securities were
classified as Level 1 assets with a fair value of $42.1 million, which included money market funds
of $24.0 million and short-term investments of $18.1 million. The Company had no Level 2 or Level
3 assets or liabilities at March 31, 2011 or December 31, 2010.

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations should be read in
conjunction with our consolidated financial statements and the related notes to our consolidated
financial statements included in this report. In addition to historical financial information, this
report contains forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934 that concern matters that involve
risks and uncertainties that could cause actual results to differ materially from those projected
in the forward-looking statements. These forward-looking statements are intended to qualify for the
safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical fact contained in this report, including statements
regarding future events, our future financial performance, our business strategy and plans and
objectives of management for future operations, are forward-looking statements. We have attempted
to identify forward-looking statements by terminology including anticipates, believes, can,
continue, could, estimates, expects, intends, may, plans, potential, predicts,
should or will or the negative of these terms or other comparable terminology. Although we do
not make forward-looking statements unless we believe we have a reasonable basis for doing so, we
cannot guarantee their accuracy. Such forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results and the timing of certain events to
differ materially from future results expressed or implied by such forward-looking statements.
Actual results could differ materially from those projected in forward-looking statements as a
result of the following factors, among others: acceptance and continued use of our products by
surgeons, the lack of clinical data about the efficacy of our products, uncertainty of
reimbursement from third-party payors, our historical lack of profitability, cost pressures in the
healthcare industry, competitive pressures from substitute products and larger companies, our
dependence on key employees, regulatory approval and market acceptance for new products, our
reliance on a limited number of suppliers to provide our products, our ability to effectively
manage a sales force to meet our objectives and our ability to conduct successful clinical
studies. Readers are urged to carefully review and consider the various disclosures made
by us, which attempt to advise interested parties of the risks, uncertainties, and other factors
that affect our business, operating results, financial condition and stock price, including without
limitation the disclosures made under the caption Managements Discussion and Analysis of
Financial Condition and Results of Operations in this report and in the consolidated financial
statements and notes thereto included elsewhere in this report, as well as the disclosures made
under the captions Managements Discussion and Analysis of Financial Condition and Results of
Operations, Risk Factors, Consolidated Financial Statements and Notes to Consolidated
Financial Statements included in our Annual Report on Form 10-K for the year ended December 31,
2010, and in other filings we make with the Securities and Exchange Commission, or the SEC.
Furthermore, such forward-looking statements speak only as of the date of this report. We expressly
disclaim any intent or obligation to update any forward-looking statements after the date hereof to
conform such statements to actual results or to changes in our opinions or expectations except as
required by applicable law or the rules of the NASDAQ Stock Market. References in this report to
TranS1, we, our, us, or the Company refer to TranS1 Inc.

Overview

We are a medical device company focused on designing, developing and marketing products that
implement our proprietary approach to treat degenerative conditions of the spine affecting the
lower

lumbar region. Using our pre-sacral approach, a surgeon can access discs in the lower lumbar
region of the spine through a small incision adjacent to the tailbone and can perform an entire
interbody fusion procedure through a small tube that provides direct access to the intervertebral
space. We
developed our pre-sacral approach to allow spine surgeons to access and treat intervertebral spaces
without compromising important surrounding soft tissue. We believe this approach enables fusion
procedures to be performed with low complication rates, low blood loss, short hospital stays, fast
recovery times and reduced pain. We currently market our AxiaLIF® family of products for
single and multilevel lumbar fusion, the Vectre and Avatar lumbar posterior fixation systems and
Bi-OsteticTM bone void filler, a biologics product.

From our incorporation in 2000 through 2004, we devoted substantially all of our resources to
research and development and start-up activities, consisting primarily of product design and
development, clinical trials, manufacturing, recruiting qualified personnel and raising capital. We
received 510(k) clearance from the U.S. Food and Drug Administration, or FDA, for our AxiaLIF 1L
product in the fourth quarter of 2004, and commercially introduced our AxiaLIF 1L product in the
United States in the first quarter of 2005. We received a CE mark to market our AxiaLIF 1L product
in the European market in the first quarter of 2005 and began commercialization in the first
quarter of 2006. We received a CE mark for our AxiaLIF 2L product in the third quarter of 2006 and
began commercialization in the European market in the fourth quarter of 2006. We received FDA
510(k) clearance for our AxiaLIF 2L product and began marketing this product in the United States
in the second quarter of 2008. The AxiaLIF 2L product was discontinued in 2010 after we launched
our AxiaLIF 2L+ product in July 2010, for which we had received FDA 510(k) clearance in January
2010. We commercially launched our next generation Vectre facet screw system in April 2010. In
the first quarter of 2010, we entered into agreements to distribute Avatar, a pedicle screw system,
and Bi-Ostetic bone void filler, a biologics product. In March 2011, we received FDA 510(k)
clearance for our next generation AxiaLIF 1L+ product and made it commercially available in a
limited market release. We currently sell our products through a direct sales force, independent
sales agents and international distributors.

We rely on third parties to manufacture all of our products and their components, except for our
nitinol nucleus cutter blades, which we manufacture at our facility in Wilmington, North Carolina.
Our outsourcing partners are manufacturers that meet FDA, International Organization for
Standardization, or ISO, or other internal quality standards, where applicable. We believe these
manufacturing relationships allow us to work with suppliers who have the best specific competencies
while we minimize our capital investment, control costs and shorten cycle times, all of which we
believe allows us to compete with larger-volume manufacturers of spine surgery products.

Since inception, we have been unprofitable. As of March 31, 2011, we had an accumulated deficit of
$96.4 million.

We expect to continue to invest in creating a sales and marketing infrastructure for our AxiaLIF
family of products in order to gain wider acceptance for them. We also expect to continue to invest
in research and development and related clinical trials, and increase general and administrative
expenses as we grow. As a result, we will need to generate significant revenue in order to achieve
profitability.

We generate revenue from the sales of our implants and disposable surgical instruments. We have two
distinct sales methods. The first method is when implants and/or disposable surgical instruments
are sold directly to hospitals or surgical centers for the purpose of conducting a scheduled
surgery. Our sales representatives or independent sales agents hand deliver the products to the
customer on or before the day of the surgery. The sales representative or independent agent is then
responsible for reporting the delivery of the products and the date of the operation to the
corporate office for proper revenue recognition. We recognize revenue upon the confirmation that
the products have been used in a surgical procedure. The other sales method is for sales to
hospitals for consumption during future surgeries or to distributors outside the United States.
These transactions require the customer to send in a purchase order before shipment will be made
and the customer only has the right of return for defective products. We expect that a substantial
amount of our revenues will continue to be generated in the United States in future periods.

Cost of Revenue

Cost of revenue consists primarily of material and overhead costs related to our products. Cost of
revenue also includes facilities-related costs, such as rent, utilities and depreciation.

Research and Development

Research and development expenses consist primarily of personnel costs within our product
development, regulatory and clinical functions and the costs of clinical studies and product
development projects. In future periods, we expect research and development expenses to grow as we
continue to invest in basic research, clinical trials, product development and intellectual
property.

service fees, legal fees, accounting fees, insurance costs and general corporate expenses. We
expect general and administrative expenses to increase as we grow our business.

Other Income (Expense), Net

Other income (expense), net is primarily composed of interest earned on our cash, cash equivalents
and available-for-sale securities and the loss on disposal of fixed assets.

Results of Operations

Comparison of the Three Months Ended March 31, 2010 and 2011

Revenue. Revenue decreased from $6.7 million in the three months ended March 31, 2010 to $5.1
million in the three months ended March 31, 2011. The $1.6 million decrease in revenue from 2010 to
2011 was primarily a result of a lower number of AxiaLIF cases performed in 2011, which was due
primarily to physician reimbursement limitations and insurance denials for lumbar fusion surgery
due to medical necessity. Domestically, sales of our AxiaLIF 1L products decreased from $3.5
million in the three months ended March 31, 2010 to $2.5 million in the three months ended March
31, 2011, and sales of our AxiaLIF 2L products decreased from $1.9 million in the three months
ended March 31, 2010 to $1.5 million in the three months ended March 31, 2011. Sales of our
pedicle screw system, which was introduced in January 2010, were $0.1 million for the three months
ended March 31, 2010 and 2011 and sales of our Bi-Ostetic bone void filler, which we introduced in
February 2010, increased from $17,000 in the three months ended March 31, 2010 to $0.2 million in
the three months ended March 31, 2011. In the three months ended March 31, 2011, average revenue
per AxiaLIF case continued to increase, helped by a price increase effective April 1, 2010, the
release of our AxiaLIF 2L+ product in July 2010, and penetration into existing cases by our new
products. In the three months ended March 31, 2010 and 2011, we recorded 537 and 369 domestic
AxiaLIF cases, respectively, including 141 AxiaLIF 2L cases in the three months ended March 31,
2010, and 102 AxiaLIF 2L and 2L+ cases in the three months ended March 31, 2011. Additionally,
during the three months ended March 31, 2010 and 2011, we generated $0.5 million and $0.3 million,
respectively, in revenues from sales of our facet and Vectre screw systems. Revenue generated
outside the United States decreased from $0.7 million in the three months ended March 31, 2010 to
$0.6 million in the three months ended March 31, 2011. There were no initial stocking shipments to
new distributors outside the United States in the three months ended March 31, 2010 or March 31,
2011. In the three months ended March 31, 2010 and 2011, 90% and 89%, respectively, of our
revenues were generated in the United States.

Cost
of Revenue. Cost of revenue decreased from $1.4 million in the three months ended March 31,
2010 to $1.3 million in the three months ended March 31, 2011. Gross margin decreased from 78.7%
in the three months ended March 31, 2010 to 74.7% in the three months ended March 31, 2011. The
decrease in gross margin was primarily due to a higher percentage of sales being derived from
distributed products in 2011 as compared to 2010, which have a lower gross margin than our AxiaLIF
products.

Research
and Development. Research and development expenses increased from $1.3 million in the
three months ended March 31, 2010 to $1.6 million in the three months ended March 31, 2011. The
$0.3 million increase in expenses from 2010 to 2011 was primarily related to an increase in
clinical trials and project spending of $0.2 million and an expense of $0.3 million to acquire the
exclusive license to a new technology under development offset by a decrease in salaries and
benefits of $0.1 million.

Sales
and Marketing. Sales and marketing expenses decreased from $7.7 million in the three months
ended March 31, 2010 to $6.4 million in the three months ended March 31, 2011. The decrease in
expenses from 2010 to 2011 of $1.3 million was primarily due to lower personnel-related costs of
$0.7 million, including lower commissions of $0.3 million, as we reduced our U.S. sales force to
focus our resources, decreased travel and entertainment expenses of $0.2 million, decreased surgeon
training expenses of $0.2 million and decreased promotional expenses of $0.2 million.

General
and Administrative. General and administrative expenses decreased from $2.6 million in the
three months ended March 31, 2010 to $1.6 million in the three months ended March 31, 2011. The
decrease in expenses from 2010 to 2011 of $1.0 million was primarily due to a decrease in
personnel-related expenses, including management transition costs that occurred in the first
quarter of 2010.

Other
Income (Expense), Net. Other income (expense), net, increased from a loss of $49,000 in the
three months ended March 31, 2010 to income of $18,000 in the three months ended March 31, 2011.
The increase of $67,000 from 2010 to 2011 was primarily related to a loss on disposal of fixed
assets of $71,000 in the three months ended March 31, 2010.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception in 2000, we have incurred significant losses and, as of March 31, 2011, we had
an accumulated deficit of $96.4 million. We have not yet achieved profitability, and anticipate
that we will continue to incur losses in the near term. We expect to continue to fund research and
development, sales and marketing and general and administrative expenses at similar to current
levels or higher and, as a result, we will need to generate significant revenues to achieve
profitability. Prior to our October 2007 initial public offering, our operations were funded
primarily with the gross proceeds from the sale of preferred stock of $40.5 million. The net
proceeds from our October 2007 initial public offering of $86.7 million have funded our operations
since then.

As of March 31, 2011, we did not have any outstanding debt financing arrangements, we had working
capital of $40.9 million and our primary source of liquidity was $36.5 million in cash, cash
equivalents and short-term investments. We currently invest our cash and cash equivalents
primarily in money market treasury funds and our short-term investments primarily in U.S. agency
backed debt instruments.

Cash, cash equivalents and short-term investments decreased from $42.5 million at December 31, 2010
to $36.5 million at March 31, 2011. The decrease of $6.0 million was primarily the result of net
cash used in operating activities of $6.0 million and purchases of property and equipment of
$69,000 offset by net cash provided from issuance of our common stock upon the exercise of stock
options of $12,000.

Cash Flows

Net
Cash Used in Operating Activities. Net cash used in operating activities was $6.0 million in the
three months ended March 31, 2011. This amount was attributable primarily to the net loss after
adjustment for non-cash items, such as depreciation, stock-based compensation expense, inventory
and bad debt reserves, combined with changes in working capital requirements to support the market
acceptance of our AxiaLIF products.

Net
Cash Provided by Investing Activities, Net cash used by investing activities was $12.2 million
in the three months ended March 31, 2011. This amount reflected net purchases or sales and
maturities of short-term investments of $12.1 million, offset by purchases of property and
equipment of $0.1 million, primarily for reusable instrument kits used in the field and information
technology needs.

Net
Cash Provided by Financing Activities. Net cash provided by financing activities in the three
months ended March 31, 2011 was $12,000, which represented proceeds from the issuance of shares of
our common stock upon the exercise of stock options.

Operating Capital and Capital Expenditure Requirements

We believe that our existing cash and cash equivalents, together with cash received from sales of
our products, will be sufficient to meet our cash needs for at least the next two years. We intend
to spend substantial sums on sales and marketing initiatives to support the ongoing
commercialization of our products and on research and development activities, including product
development, regulatory and compliance, clinical studies in support of our currently marketed
products and future product offerings, and the enhancement and protection of our intellectual
property. We may need to obtain additional financing to pursue our business strategy, to respond to
new competitive pressures or to take advantage of opportunities that may arise. The sale of
additional equity or convertible debt securities could result in dilution to our stockholders. If
additional funds are raised through the issuance of debt securities, these securities could have
rights senior to those associated with our common stock and could contain covenants that would
restrict our operations. Any additional financing may not be available in amounts or on terms
acceptable to us, if at all. If we are unable to obtain this additional financing, we may be
required to reduce the scope of our planned product development and marketing efforts.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our
consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of financial statements
requires management to make estimates and judgments that affect the reported amounts of assets and
liabilities, revenue and expenses, and disclosures of contingent assets and liabilities at the date
of the financial statements. On an on-going basis, we evaluate our estimates, including those
related to revenue recognition, accounts receivable reserves, inventory reserves, accrued expenses,
income tax valuations and stock-based compensation. We base our estimates on historical experience
and various other assumptions that we believe to be reasonable, the results of which form the basis
for making judgments about the carrying value of assets and liabilities that are not apparent from
other sources. Actual results could differ from those estimates under different assumptions or
conditions.

For a description of our critical accounting policies and estimates, please refer to the Critical
Accounting Policies and Estimates section of the Managements Discussion and Analysis of
Financial Condition and Results of Operations section contained in our Annual Report on Form 10-K
for the year ended December 31, 2010. There have been no material changes in any of our accounting
policies since December 31, 2010.

There have been no recently issued accounting standards that have an impact on our financial
statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial
officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or
the Exchange Act) as of March 31, 2011. We maintain disclosure controls and procedures that are
designed to provide a reasonable assurance level that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms and that such information is
accumulated and communicated to our management, including our principal executive officer and
principal financial officer, as appropriate, to allow for timely decisions regarding required
disclosure. Our management recognizes that any controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving their objectives and management
necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls
and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31,
2011, our principal executive officer and principal financial officer concluded that, as of such
date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that
has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.

Effective July 1, 2010, we became a Smaller Reporting Company under Rule 12b-2 of the Exchange
Act. Previously we were an Accelerated Filer. This classification is based on the aggregate
market value of our voting stock held by non-affiliates as of June 30, 2010.

PART II. OTHER INFORMATION

Item 6. Exhibits

A list of the exhibits required to be filed as part of this report is set forth in the Exhibit
Index, which immediately precedes such exhibits, and is incorporated herein by reference.

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